The £7,500 'family home tax'

The failure to lift stamp duty bands has left families buying the average home in one in six towns across England burdened with a tax bill of at least £7,500, according to research released today.

Figures compiled by Halifax show that in the nine years since the higher stamp duty thresholds were introduced, rocketing house prices mean that 79 English towns have an average home value above the £250,000 level compared to none when it was brought in.

The rise in property values has rendered higher rate stamp duty a tax on family homes in many areas where people are already struggling to afford a property.

If the £250,000 3% threshold had been increased in line with house price inflation since its introduction in 1997, it would now stand at £650,000. Meanwhile, the top level 4% threshold of £500,000 would now be £1.3m.

The levelling of 3% stamp duty on purchasers homes costing between £250,000 and £500,000 has become an extra burden on buyers already struggling with high house prices in their area.

Fears have been expressed that first-time buyers and young next-time buying families in London and the South East, home to two-thirds of the nation's above £250,000 properties, are stretching themselves beyond their means to afford a home.

The way that the tax is charged means that it is levied on the home's entire value, rather than that above the threshold. A young family attempting to buy an average £300,000 two-bedroom house in London would face a stamp duty bill of £9,000.

Five towns outside the south of England have an average house price above £250,000 - Wilmslow(£307,003), Altrincham (£267,743), Stratford upon Avon (£254,652), Solihull (£253,674) and Ilkley(£298,703).

Martin Ellis, economist at the Halifax, said: 'The average homebuyer in one in six towns in England is now facing a stamp duty bill of more than £7,500. The higher stamp duty thresholds haven't been adjusted since their introduction in 1997, despite a rise in house prices of more than 160%.

'We call on the Government to increase the higher stamp duty thresholds in line with the increase in house prices since 1997. We believe the Government should commit to index link all the stamp duty thresholds to house price inflation in the future.'

An estimated 2.6m English properties are now valued above the £250,000 threshold and the amount of revenue raised from sales of properties valued at £250,000 or more has risen by 175% in five years, from £1.2bn in 2000/1 to £3.4bn in 2005/6.